The Barron’s weekly newspaper is the “hot read” for Wall Streeters – both institutional and retail investors alike eagerly absorb the news and opinions of the editors, writers, and columnists. “Did you see Barron’s….?” is a familiar question in the investment community.

And so we ask — did you see Barron’s story this week (Feb 11th issue)? “A New Era of Sustainability Emerges,” tells readers that the flurry of policy directives at the Trump White House has “fueled activism across the country;” it may also light a fire under some investors focused on sustainable business practices.

Columnist Reshma Kapadia says President Trump’s and allies proposals to roll back environmental and financial regulations…and reject climate-change science…the priorities of a growing number of investors who put a premium on environmental stewardship, corporate governance, transparency, and diversity are at odds with the Trumpian-era directions.

“But here’s the thing,” Reshma Kapadia writes, “the political backdrop could actually be good for ‘so-called’ ESG funds…” And then she cites the authority of US SIF and the most recent survey of asset managers using ESG criteria — $US9 trillion, or $1-in-$5 in the US capital markets.

Important: EPFR Global reports that since the November elections, investors have put almost $400 million into ESG stock funds. And quoting Morningstar’s Jon Hale (head of sustainability research), “the political back drop could have a galvanizing effect, as investors look for ways to more explicitly support sustainable ideas.”

This is a report that you’ll want to read and share. ESG investing is just common-sense investing, observes the columnist. It’s one of the most important perspectives in sustainable, responsible and impact investing to appear in the new political era.

Reshma has been with The Wall Street Journal, Smart Money magazine, Reuters, and appears regularly in Barron’s pages.

(Note that you’ll have to register to read or be a subscriber to Barron’s. There are more than 300,000 weekly readers, subscription and newsstand.)

Top Story

A New Era of Sustainable Investing Emerges(Monday – February 13, 2017)Source: Barron’s – The political backdrop could actually be good for so-called ESG funds, which include environmental, social, and governance criteria in their stock-picking.

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Are you like many of us having sleepless nights and anxiety spells as you watch the antics of the Trump White House and the creeping (and similarly moving-backwards) effects into the offices of important Federal agencies that the Administration is taking over?

Consider then “other news” — and not fake news, mind you, or alt-news— but encouraging real news that is coming from OTHER THAN the Federal government.

We are on track to continue to move ahead in building a more sustainable nation and world — despite the roadblocks being discussed or erected that are designed to slow the corporate sustainability movement or the steady uptake of sustainable investing in the capital markets.

Consider the Power and Influence of the Shareowner and Asset Managers:

The CEO of the largest asset manager in the world — BlackRock’sLarry Fink — in his annual letters to the CEOs of the S&P 500 (R) companies in January said this: “Environmental, social and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects. We look to see that a company is attuned to the key factors that contribute to long-term growth:
(1) sustainability of the business model and its operations; (2) attention to external and environmental factors that could impact the company; (3) recognition of the company’s role as a member of the communities in which it operates.

A global company, CEO Fink wrote to the CEOs, needs to be “local” in every single one of its markets. And as BlackRock constructively engages with the S&P 500 corporate CEOs, it will be looking to see how the company’s strategic framework reflects the impact of last year’s changes in the global environment…in the ‘new world’ in which the company is operating.

BlackRock manages US$5.1 trillion in Assets Under Management. The S&P 500 companies represent about 85% of the total market cap of corporate equities. Heavyweights, we would say, in shaping U.S. sustainability.

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As S&R investment pioneer Steve Viederman often wisely notes, “where you sit determines where you stand…” (on the issues of the day). More and more commercial space users (tenants and owners) want to “sit” in green spaces — which demonstrates where they “stand” on sustainability issues.

Consider: In the corporate sector, Retail and other tenants are demanding that landlords provide “green buildings,” according to Chris Noon (Builtech Services LLC CEO). The majority of his company’s construction projects today can easily achieve LEED status, he says (depending on whether the tenant wanted to pursue the certification, which has some cost involved). The company is Chicago-based.

This is thanks to advances in materials, local building codes, a range of technology, and rising customer-demand.

End users want to “sit” in “green buildings” — more than 40% of American tenants recently surveyed across property types expect now to have a “sustainable home.” The most common approaches include energy-saving HVAC systems, windows and plumbing. More stringent (local and state) building codes are also an important factor.

Municipalities — not the Federal government — are re-writing building codes, to reflect environmental and safety advances and concerns. Next week (Feb 28) real estatyer industry reps will gather in Chicago for the Bisnow’s 7th Annual Retail Event at the University Club of Chicago to learn more about these trends.

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Institutional investors managing US$17 trillion in assets have created a new Corporate Governance framework — this is the Investor Stewardship Group.

The organizers include such investment powerhouses as BlackRock, Fidelity and RBC Global Asset Management (a dozen in all are involved at the start). There are six (6) Principles advanced to companies by the group that including addressing (1) investment stewardship for institutional investors and (2) for public corporation C-suite and board room. These Principles would be effective on January 1 (2018), giving companies and investors time to adjust.

One of the Principles is for majority voting for director elections (no majority, the candidate does not go on board). Another is the right for investors to nominate directors with information posted on the candidate in the proxy materials.

Both of these moves when adopted by public companies would greatly enhance the activism of sustainable & responsible investors, such as those in key coalitions active in the proxy season, and year-round in engagements with companies (such as ICCR, INCR).

No waiting for SEC action here, if the Commission moves away from investor-friendly policies and practices as signaled so far. And perhaps – this activism will send strong messages to the SEC Commissioners on both sides of the aisle.

Remember: $17 trillion in AUM at the start of the initiative — stay tuned to the new Investor Stewardship Group. These are more “Universal Owners” with clout.

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Not really unexpected but disappointing nevertheless: The Trump Administration made its moves on the Dakota Access Pipeline (DAPL), part of the Bakken Field project work, carrying out a campaign promise that caters to the project’s primary owners (Energy Transfer Partners**) and other industry interests, S&R investors are acting rapidly in response.

The company needed a key easement to complete construction across a comparatively small distance. Except that…

The Standing Rock Sioux Tribe says the route would cross their drinking water source, impact their sacred sites, and threaten environmentally-sensitive areas;

would violate treaty territory without meeting international standards for their consent; (this is the 1868 Fort Laramie Treaty, which according to the U.S. Constitution, should be the supreme law of the land);

These are “abuses”, and banks and financial services firms involved may be complicit in these violations by the nature of their financing, S&R investors note. Their involvement in the project financing could impact their brands and reputations and relationships with society. And so S&R shareholders are taking action.

Boston Common Asset Management, Storebrand Asset Management (in Norway) and First Peoples Worldwide developed an Investor Statement to Banks Financing the DAPL. The statement — being signed on to by other investors — is intended to encourage banks and lenders to support the Rock Sioux Tribe’s request for re-routing the pipeline to not violate — “invade” — their treaty-protected territory. The violations pose a clear risk, SRI shareholders are saying.

The banks involved include American, Dutch, German, Chinese, Japanese, and Canadian institutions. They in turn are owned by shareholders, public sector agencies, and various fiduciaries — “Universal Owners,” we would say.

The shareholders utilizing the Investor Statement say they recognize that banks have a contractual obligation with the respect to their transactions — but — they could use their influence to support the Tribe’s request for a re-route…and reach a “peaceful solution” acceptable to all parties.

As The Washington Postreported on January 24th, soon after the Trump Administration settled in, President Trump signed Executive Orders to revive the DAPL and the Keystone XL pipelines. “Another step in his effort to dismantle former President Barack Obama’s environmental legacy,” as the Post put it.

One Executive Order directed the U.S. Army Corps of Engineers to “review and approve in an expedited manner” the DAPL. Days later the Corps made their controversial decision, on February 7th reversing course granting Energy Transfer Partners their easement. This week the remaining protestors were removed from the site (some being arrested).

The sustainable & responsible & impact investment community is not sitting by to watch these egregious events, as we see in the Investor Statements to the banks involved. The banks are on notice — there are risks here for you.

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May be what is happening in the asset management and project lending activities related to the project is the IBG / YBG worldview of some in the financial services world: I’ll Be Gone / You’ll Be Gone when all of this hits the fan one day. (Like the massive Ogalala Aquifer being contaminated by a pipeline break. The route of the extension is on the ground above and on the reservation’s lake bed. Not to mention the threats to the above ground Missouri River, providing water downstream to U.S. states and cities.)

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Energy Transfer Partners, L.P: (NYSE:ETP) This is a Master Limited Partnership based in Texas. Founded in 1995, the company has 71,000 miles of pipelines carrying various products. The company plans to build other major pipelines — the Rover Project — to carry product from the shale regions (Marcellus and Utica) across the Northern U.S. state east of the Mississippi. ETP LP acquired Sunoco (remember them?).

Mutual Funds – Bond Holders – other key fiduciaries with brands of their own to protect — are funding the operations of ETP LP.

The Partnership used to have an “Ownership” explanation on its web site — now it’s disappeared. But you can review some of it in Google’s archived web site pages here: http://webcache.googleusercontent.com/search?q=cache:http://www.energytransfer.com/ownership_overview.aspx&num=1&strip=1&vwsrc=0

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We are seeing in developments every day (like these above with non-governmental strategies and actions) that hold out promise for corporate and societal sustainability advocates and sustainable investment professionals that with — or without — public sector support, the Forward Momentum continue to build.

We’ll share news and opinion with you — let us know your thoughts, and the actions that you / your organization is taking, to continue the momentum toward building a better future…a more sustainable nation and world.

Out the Seventh Generation,as the Native American tribes are doing out in the American West in protecting their Treaty lands. In that regard we could say, a promise is a promise — the Federal and state governments should uphold promises made in treaties. Which are covered as a “guarantee” by the U.S. Constitution that some folk in politics like to wave around for effect.

FYI — this is Article VI:“This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land, and the Judges in every State shall be bound thereby…”

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The leader’s baton is passed and the U.S. EPA has a new head of agency. E. Scott Pruitt got passed the opposition mounted to his nomination by President Trump and is now the 14th Administrator of the Agency. He was the Attorney General of the State of Oklahoma.

Where he mounted more than a dozen attacks in the courts against the Federal protector of land, air, water and more. The cases are still pending; Administrator Pruitt has not yet said he would recuse himself from the proceedings.

The lawsuits challenged EPA on various rules dealing with mercury pollution, carbon emissions, smog, protecting of waters and wetlands, and more.

The EPA Highlightsoutreach today proclaimed that Scott Pruitt “…believes promoting and protecting a strong and healthy environment is one of the lifeblood priorities of the government…and EPA is a vital part of that mission…”

And — “…as Administrator, Mr. Pruitt will lead EPA in a way that our future generations inherit a better and healthier environment while advancing America’s economic interests…” We are on notice, I would say.

Meanwhile, hundreds of current and former EPA employees had urged the U.S. Senate NOT to ratify the nomination (450-plus signed on). In Chicago, at lunch time, possibly imperiling their careers at the Agency, EPA Region 5 employees poured out of the office and into the streets at lunch time in protest.

More than two dozen environmental groups also challenged his qualifications.

The Washington Postyesterday reported that on his first day in office Administrator Pruitt “made clear that he intends to step back from what he sees as the Agency’s over-reach during the [President Barack] Obama years. “The only authority that any agency has,” he told a noontime gathering at EPA, “is the authority given to it by Congress. We need to respect that…”

Oh yes, Administrator Pruitt was speaking in the Rachel Carson Green Room at EPA (named for the author of Silent Spring, which helped to launch the modern environmental movement). Perhaps someone passed along her book to the new leader.

The Administrator did say, according to the Post, that the EPA and the nation could do a better job of being both pro-energy and pro-environment. Time will tell, we could say, as the actions and proclamations and loud and whispered orders come down from on high at EPA in the days ahead.

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for clues as to what may be ahead with Scott Pruitt at the helm, we could look to a commentary that the new EPA Administrator published on Public Utilities Fortnightly — ” The Methane Myth” Incompetence and overreach at the EPA… (July 2012).

He wrote: “,.,,my views on energy policy might be discounted as a simple ploy to bolster the energy industry at the expense of environmental stewardship and responsibility. That perspective would be misguided. I do strongly support energy producers and their role in the nation’s economic sustainability, but this issue isn’t about oil. Nor is it about natural gas or hydraulic fracturing. This is about a wayward federal agency arbitrarily using unsubstantiated, inaccurate, and flawed data to achieve a specific policy objective…”

And…”…The agency’s actions are at best incompetent, and at worst reprehensible. They have a very real effect on families, businesses, communities, and state economies. Without justification, they erode the states’ ability to self-regulate, and they stifle exploration of domestic energy sources, putting our national energy security at risk..”.

There’s more for you to read and process at: https://www.fortnightly.com/fortnightly/2012/07/methane-myth?page=0%2C0

The post is by E. Scott Pruitt – Attorney General of Oklahoma

and Chair, Republican Attorneys General Association

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One of the pioneer environmental protection associations is the NRDC – founded in 1970 as the Natural Resources Defense Council by attorneys and students. There are now 2 million members in the group. The group explained its opposition to AG Pruitt’s appointment in a post on its web site:

Pete Altman: “It could be his consistent record of siding with industry over public health, frequently choosing positions which benefited companies funneling money to Pruitt’s campaign, his PAC or groups he was raising money for (see here, here and here.) Or that he’s a climate denier. Or that his record includes no positive environmental achievements—as colleague John Walketweeted yesterday, out of more than 700 press releases from Pruitt’s office, not one touts any action to enforce environmental laws…”

NRDC and other of its peer NGOs and SRI investors and state officials will be watching the EPA actions VERY CLOSELY in the days ahead, we can say with some assurance.

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Late afternoon – Feb 22 — No sooner did I finish and post the above then the news came in —The Washington Post today (2-22-17) is reporting that “thousands of emails detail EPA head’s close ties to fossil fuel industry.”

In response to a legal action by the Center for Media and Democracy, thousands of the AG’s emails were released. The communications highlight, the Post report says, close relationships between AG Pruitt and fossil fuel interests.

“The emails show Pruitt and his office were in touch with a network of ultra-conservative groups…many receiving backing from billionaire brothers Charles and David Koch, owners of Koch Industries, a major oil company…”

More in the late breaking story for you at: https://www.washingtonpost.com/news/energy-environment/wp/2017/02/22/oklahoma-attorney-generals-office-releases-7500-pages-of-emails-between-scott-pruitt-and-fossil-fuel-industry/?utm_term=.7f34f5c67cd1&wpisrc=nl_evening&wpmm=1

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Some good news to share: Several large American coal-fired electric utility plant operators are abandoning the burning of coal and moving to natural gas and renewables to generate electricity. This news was reported by The Washington Post on February 14th. Headline: “The West’s largest coal-fired power plan is closing. not even Trump can save it.”

Top of the news: a plant in Arizona that is the largest coal-fired facility in the western part of the United States (the 2,250-MW Navajo Generation Station outside Page, AZ) will be de-commissioned by the owners/operators at the end of 2019 — decades before expected, said the Post.

In the era of low natural gas prices, the use of coal would cost more to produce electric power, which would be passed on to the rate base. The US EPA had listed the plant as the #3 of the major carbon-emitting facilities.

The facility is operated by the Salt River Project, utility companies and the U.S. Bureau of Reclamation*. The facility serves the Phoenix area.

The downside: members of the Navajo and Hopi tribes would (1) lose their jobs in the Kayenta Mine that provides that provides the coal, and (2) the tribes will lose certain royalty payments. Cautionary note: The tribes of other operators could step up to continue operations.

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And less than a month earlier, in the State ofOhio the Dayton Power & Light Company and the Sierra Club reached agr3eement to close two plants (Killen and Stuart) which are coal-fired facilities. These will close in mid-2018. Stuart is a 2,440-MW plant; Killen is 666-MW.

Dayton Power & Light will develop solar power facilities to generate about half of the 555-MW by 2022.

The state’s Public Utilities Commission has the plan for its approval from DP&L. This is good news for environmental NGOs and Ohio consumers; rate payers would be paying more for their electric power with coal — and be breathing in the results of coal-burning.

All of this, of course, comes as President Trump continues to promise to bring back coal mining, and signed an Executive Order to remove the obstacle for mining companies to dump wastes into surface waters (something that President Obama moved to prevent).

The shift from coal to natural gas: Forward Momentum in 2017 for sustainability!

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Footnote: About the Bureau of Land Reclamation*, from its web site: Established in 1902, the Bureau of Reclamation is best known for the dams, powerplants, and canals it constructed in the 17 western states. These water projects led to homesteading and promoted the economic development of the West. Reclamation has constructed more than 600 dams and reservoirs including Hoover Dam on the Colorado River and Grand Coulee on the Columbia River.

The Bureau is the largest wholesaler of water in the country, bringing water to more than 31 million people, and provided one-out-of-five Western farmers (140,000) with irrigation water for 10 million acres of farmland that produce 60% of the nation’s vegetables and 25% of its fruits and nuts.

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It’s an age-old topic of discussion: Where in American business do the issues of morality, ethical behaviors, and “fair and equitable” fit in? Andrew Winston, author of the best-selling “Green to Gold,” explores the topic (“morality”) in an essay on Sustainable Brands’ “New Metrics” web platform.

Morality: moralizing; degree of conforming to moral principles. So — in exploring the subject of morality in business, Andrew Winston thinks managers should crank the “moral” arguments into making-the-business case-for-corporate-sustainability discussions. Making-the-financial-case (“investors want to know…”) is occurring more frequently now with many more mainstream investors focused on the firm’s ESG performance and the sustainability journey of especially large-cap enterprises.

“This is the right thing to do…” may be the persuasive argument in making the business case to decision-makers. The moral positions of companies and their leaders are facing greater scrutiny now, says Winston. Will companies defend LGBT rights — or protect immigrant employees? Will they publicly argue for greater attention and action on climate change issues? (It’s the right thing to do, many of you, dear readers, will agree.)

In our Top Story, author Andrew Winston sets out four “buckets” of arguments as to how the initiatives companies pursue create value — and three “mainstream” arguments (have some element of making-the-business-case, such as “short-term financial wins”). The fourth argument — improve the shared commons — and is it time to broaden how we talk about sustainability and bring in a moral dimension.

The traditional business case is still critical – but broadening the arguments in making the sustainability business case has Winston wondering if a combined logic or “good for business” and “good for the soul” will work. He welcomes your thoughts after reading the essay.

Governance & Accountability Institute, Inc. is now in the 10th year of operations. When we founded G&A back in 2007, we adopted the tagline: Helping our clients do the right things for the right reasons. That’s guided us to 2017 and benefited many of our corporate clients and our partners-in-progress.

State Street Corp is one of the world’s leading asset managers, with US$2.47 trillion in AUM. State Street Global Advisors CEO Ron O’Hanley in late-January sent a message to the boards of directors of public companies whose stock is in State Street portfolios: SSGA is increasing focus on climate change, safety, workplace diversity and various other ESG issues. Especially climate change. Tell us more about what you are doing.

How? The State Street Global Advisors CEO is asking, how is the board [of the company] preparing the enterprise for the impacts of climate change? He is communicating to these directors that it is necessary for boards to disclose more about those plans. The CEO’s letter was accompanied by a description of the framework that SSGA uses to evaluate public companies’ sustainability efforts.

In this week’s first Top Story, the highlights of the approach are described for you. Three criteria are used to evaluate and rank companies — as Tier One, Two and Three. Tier One companies satisfy the three criteria. The results are reflected in the proxy voting of SSGA, the #3 asset manager of ETF’s in the USA (Exchange Traded Funds).

There were 177 companies in the portfolio that SSGA evaluated in 2016; a mere 7% qualified as Tier One. Tier Two totals 72%, which meant that companies had a sustainability program but had not integrated it into its overall business strategy, articulated how ESG factors affected long-term strategies, or established long-term goals aligned with ESG strategy. (Tier Three companies were described as not doing anything ESG-wise, 21% of companies in the portfolio, according to the Think Advisor story.)

Company boards and C-suite should consider that State Street is an active player in the coming proxy voting season. SSGA supported 46% of climate-related proposals in 2016. That’s important when you consider the competition: the vote count was zero (voting) at Vanguard, American Funds, Black Rock and Fidelity — a source of concern and a growing level of activism on the issue among sustainable & responsible investing advocates.

In an interview with Bloomberg’s top environmental reporter, Emily Chasan in January (our second Top Story below), SSGA CEO O’Hanley said: “We’re asking companies to make sure they are identifying and communicating both their risks and opportunities. Climate change may be the poster child for risk out there.”

The Bloomberg Business Week story has a neat chart for you, with the voting records of “shares of proxy votes in favor of climate-related proposals.” The Top 20 of the world’s asset managers’ voting records are presented. State Street is the fifth-ranked (at the top).

Stay Tuned, as we often say, to the coming 2017 Proxy Voting Season at public companies. ESG issues are front and center at some large corporate issuers and the action will be in the maneuvering around the shareholder-offered resolutions on climate change and other ESG issues by the entire voting body.

Story links below:

State Street Wants Companies to Focus on Sustainability(Wednesday – February 01, 2017)Source: Think Advisor – State Street Global Advisors, the third-largest provider of ETFs, wants more companies to incorporate sustainability practices into their long-term business strategies and will consider such corporate efforts in its upcoming

This is not encouraging: the respected management consulting company Bain & Company surveyed the leaders of 300 companies engaged in “sustainability transformation” and conducted interviews with heads of sustainability recognized for outstanding results.

The question: What are the results of instituting sustainability as a top priority? The answer: Alas, not really encouraging for stakeholders, says Bain & Company. There’s an important “but” here with tips for CEOs and C-suite on how to overcome the odds of losing forward momentum in corporate sustainability efforts.

The management consulting firm published the results of its research in: “Achieving Breakthrough Results in Sustainability.” This effort found that for the 300 companies, only two percent (2%) of their corporate sustainability programs achieved or exceeded their aims when compared to the companies’ other transformation programs (which had a 12% success rate). There are “change traps” that keep companies from reaching their goals.

Key quote: “Too often, sustainability gets stuck in first gear, while the need for change is accelerating,” said Jenny Davis-Peccoud, who leads Bain’s Sustainability & Corporate Responsibility practice. “Once companies learn to navigate common roadblocks, they open the door to a transformational journeyand the potential to leave a legacy,prompting companies to redefine what it means to be a leader in their industry.”

We see this in our analysis of corporate sustainability reporting as the Global Reporting Initiative data partners for the United States, United Kingdom and Republic of Ireland. The corporate leaders in sustainability have made “the journey” an integral part of strategy-setting, operations, marketing, employee motivation, stakeholder (including investor) engagement, and incentivizing internal behaviors. The “leaders” and “laggards” in sectors and industry categories self-identify through their reporting on achieved progress (and stalled progress is also apparent).

One of the issues Bain found in its survey effort and conversations with managers is that the rank and file employees do not see sustainability as a business imperative — even though those at the top of the organization understand that enhancing the firm’s “public reputation” is a key driver for sustainability change. Two important factors emerged from the Bain effort: Less than 1/4 of the firms surveyed said employees were held accountable for sustainability through incentives; and, there was a lack of resources as well as competing priorities to deal with.

G&A Institute analysts look for the winning characteristics that overcome these obstacles in their report analysis. G&A has designed a series of tools and services to help companies engage more effectively with their employees on sustainability goals and initiatives that is proving to be very successful among our clients. Please let us know if you’d like to set up a call to discuss how we can help your company.

Among the four tips for CEOs and corporate leadership from Bain: “Highlight the Business Case.” (Helping to make the case: for brand marketers, those with a demonstrated commitment to sustainability grew four times faster than their peers in 2015, according to the Nielsen Global Corporate Responsibility Report.)

There’s more in the Top Story this week, along with information on requesting a copy of the report from Bain & Company. Inc.